Hooked on Europe: Regulation Changes Won’t Stop Foreign Sales

Greece, Portugal and Spain have seen a booming luxury property market in the past few years, driven significantly by overseas buyers and a strong U.S. dollar that left Americans with increased purchasing power.

Many international buyers are particularly drawn to destinations that offer favorable residency options or citizenship-byinvestment opportunities like Europe’s Golden Visa programs. “Ongoing volatility is amplifying security, political and economic risks, prompting affluent families globally to diversify their domicile portfolios via investment migration to enhance economic mobility and protect their lifestyles, wealth and legacies,” according to the Henley Private Wealth Migration Report 2023.

Greece, Portugal and Spain all ranked in the top 15 countries with a projected net inflow of more than 100 high-net-worth individuals in 2023, according to Henley. Greece came in at number seven worldwide, with a projected inflow of 1,200 HNWIs in 2023, up 20% from 2022. Portugal ranked ninth, with a projected inflow of 800, down from 1,400 in 2022. Spain ranked 14th, with a projected inflow of 400—an increase of 100% from 2022. These numbers may reflect changes to the popular Golden Visa programs: Portugal’s current program is set to expire, while the minimum investment recently doubled from €250,000 to €500,000 in certain regions of Greece, pushing some investors toward Spain.

Regardless of these changes, demand from overseas buyers remains strong across all three countries. In Portugal, sales reached a five-year high in July 2023, said Michael Vincent, CEO of Berkshire Hathaway HomeServices Portugal Property.

Portugal

Well into the second year in which a strong U.S. dollar has tempted American buyers to invest in properties overseas, Portugal is still experiencing a boom. “Every day we’ve got American clients,” Vincent said. “I’d say roughly 35% of our buyers are coming from the U.S. and that’s from all over—Texas, California, New York.”

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High-Net-Worth Buyer Inflow

Berkshire Hathaway HomeServices network members say U.S. dollar value helps move the needle. Investment migration consultancy Henley & Partners ranks countries based on buyer inflow.

#7 2023 projected inflow of HNWIs: 1,200

GREECE #7 2023 projected inflow of HNWIs: 800

PORTUGAL #7

2023 projected inflow of HNWIs: 400

Henley Private Wealth Migration Report 2023

Private Wealth Migration, Past and Forecast

American buyers are attracted to Portugal because of the alluring lifestyle it offers, as well as its stability at a time of political and economic upheaval in many parts of the world. “Portugal was awarded the No. 1 place to retire to last year…It’s seventh on the Global Peace Index, so it’s a very safe place,” he said. Being surrounded by the sea, with a great quality of life and great food doesn’t hurt either, he added.

The purchasing power of the U.S. dollar also means American buyers have their pick of some of the country’s finest properties. “$500,000 gets you a beautiful threebedroom villa with a swimming pool, which I’d say four years ago wouldn’t have been the case,” he said. “You’d get half the size.”

In early 2023, Portugal’s premier announced plans to end the Golden Visa program, and that plan created “a bit of a mad rush” in the months that followed, Vincent said. “But it hasn’t really stopped sales. People are still buying houses because they want to invest and make some money.”

While the option for a straight swap cash purchase of real estate for a Golden Visa is ending, “there are many other options available to obtain a Golden Visa,” Vincent said. “A person can buy into a non-real estate fund for example, which is based in Portugal. This is what people are doing now and we are more than happy to guide our clients through this process.”

For American and many other overseas buyers, the Golden Visa was never the primary draw of Portugal, Vincent added. Many are second-home buyers who are content with the ability to spend 90 days out of every 180 in the country. For those who plan to spend more than three months at a stretch in Portugal, “you’ve got the D7 visa, which is very easy to obtain.”

“We’re very excited,” he concluded. “I only see [sales] increasing.”

Spain

The strength of the U.S. dollar against the euro may have eased off slightly in 2023, but that hasn’t deterred savvy American buyers from acquiring properties in Spain. “From March until November 2022 we experienced a very strong dollar that was even higher than the euro for about two months,” said Bruno Rabassa, CEO of Berkshire Hathaway HomeServices Spain. “This circumstance, together with post-Covid mobility conditions, led to a boom in purchases by foreigners,”

In 2022, the launch of direct flights between New York and Palma de Mallorca led to a 400% increase in visits to properties in the area from American buyers. 400%

Spotlight

London: Luxury Buyers and Renters Return—In a Big Way

As international buyers come back into the London luxury market, certain areas of the city are coming back to life with them. Knightsbridge, for example, an area popular with the well-heeled international crowd, is seeing a boom, according to Martin Bikhit, managing director, Berkshire Hathaway HomeServices London.

Middle Eastern buyers, long fans of London, are back in a big way, he said, after taking a couple of years off.

London luxury seems to be “reasonably resilient” and not affected by interest-rate rises, Bikhit said. “In a low interest-rate environment, purchasers were simply borrowing for convenience, so that they didn’t have to tie up their capital.” Those buyers are now just choosing to pay cash instead.

One of the strongest parts of the market is the highest echelon. “The best in class in the best location, a once-in-a-generation opportunity— those properties are trading very well,” Bikhit said. “The best house on the best street or the best apartment in the best building—they always tend to trade well and get multiple offers.”

Within the luxury market, there are two distinct types of buyers, Bikhit said. “There are families who want a generational home, a trophy home that they will keep for generations. Those go for £50 million and upwards.” and it’s continued to the present day: Many potential buyers notice that their dollars in Spain stretch a long way, and real estate taxes are low, he said.

Then there are those buyers who want something like a fullservice hotel, with staff and lots of amenities, a “lock-and-leave type of property,” he said. Depending on the neighborhood, these would go for £5 million to £10 million.

As far as inventory, the current new construction pipeline is coming to an end and there are new restrictions in certain parts of London “where you can’t build anything larger than 200 square meters, or 2,100 square feet.” So, with a finite supply of those large luxury houses, “we think they will continue to appreciate in value,” Bikhit said.

A lot of people who took flight to the countryside during Covid-19 have discovered they’re not cut out for that lifestyle and are coming back to London, he added, increasing prices with their return.

Interestingly, the rental market for luxury homes is “just insane,” he said. Rents have shot up 22% to 27%, compared with the lows of 2020 and prices have reached record levels.

Last year, the launch of direct flights between New York and Palma de Mallorca saw interest from American buyers skyrocket, leading to a 400% increase in visits to properties in the area. “U.S. citizens are discovering the second most visited country in the world, along with our unique lifestyle and the amazing connections we have—and all that led to sales,” he said, adding that in 2023 Berkshire Hathaway HomeServices Spain recorded a notable increase in visits from U.S. buyers to properties in Madrid and Barcelona and especially in Mallorca, Málaga, Costa Blanca and Marbella, all of which are coastal communities.

“Clients who were interested in Portugal and Greece are asking us for properties to qualify for the Spanish Golden Visa program,” Rabassa said.

The future of Spain’s own Golden Visa program remains uncertain after inconclusive elections. However, Rabassa said that whether or not suggestions of raising the minimum investment from €500,000 to €1 million, or even ending the program entirely, are eventually implemented, it is unlikely to have a major impact on sales—or prices.

Greece

The favorable price of luxury properties in Greece, coupled with a strong dollar, are increasingly attracting the interest of U.S. buyers, who traditionally favored Spain and Portugal. They are now among the top-10 investors in Greek property, having significantly increased their presence in the last few years, said Kyriakos Xydis, managing partner at Berkshire Hathaway HomeServices Athens Properties.

Last year alone saw an uptick in U.S. buyers of between 15% and 20%, he said, particularly in the luxury market. Despite changing market conditions in Greece, including higher interest rates, demand from Americans and other international buyers remains consistently high, with a particular focus on properties located in areas with strong tourism appeal. The most popular regions for international buyers investing in the luxury market include Athens, the in the luxury market include Athens, the city’s southern suburbs—known as the Athenian Riviera—the northern suburbs of Attica and the gorgeous Greek islands, especially the Cyclades, Mykonos, Santorini, Paros, Crete, Corfu and Rhodes.

Several of these areas have been affected by recent changes to Greece’s Golden Visa program. In August, the minimum investment doubled from €250,000 to €500,000 in the central and south sectors of Athens, as well as Mykonos, Santorini and the Municipality of Thessaloniki, the country’s second-largest city after Athens.

“The luxury market in Greece starts at €500,000,” he said, meaning that buyers in the market for a beautiful villa on Mykonos or an upscale apartment on the Athenian Riviera will automatically be eligible to apply for the Golden Visa under the new rules.

Yet Greece still saw an increased number of Golden Visa applications during the first seven months of the year, in the run-up to the change, Xydis said. “We do expect the demand to decrease during the next months,” he added.

In August 2023, the minimum investment doubled from €250,000 to €500,000 in the central and south sectors of Athens under